Twitter’s Q2 earnings approach at a pivotal time for the company

Twitter’s (TWTR) Q2 earnings this Friday come at a high-stakes moment for the social media company.

It’s a tricky time for a flurry of reasons. First, the company isn’t talking. Due to the “pending acquisition by an entity affiliated with Elon Musk,” Twitter won’t be holding an earnings call with analysts. Nevertheless, the company is tasked with communicating two somewhat contradictory messages. Simultaneously, Twitter has to signal confidence that its court battle with Musk will play out favorably, while also showing that its business is solid and built to succeed no matter what.

In Q2, analysts expect Twitter earnings to come in at $0.16 per share — a year-over-year shift of -20% — while revenues are expected to be at $1.33 billion, up 11.8% from the same time last year.

In April, Twitter unveiled its Q1 earnings just as the Musk saga was finding its footing, reporting a slight revenue miss and an increase in its user base.

Twitter’s stock has been notably turbulent, even amid a wider tech rout. Though the company hasn’t seen the biggest year-to-date decline out there, so far this year, shares have gone as low as about $32 and as high as about $50. The broader bear market, along with the uncertainty that Musk’s now-withdrawn takeover bid has wrought, has only made Twitter increasingly vulnerable.

In the last 12 months, Twitter shares have dropped nearly 45%.

A looming trial

As the company’s fortunes hang in the balance, Twitter executives have reportedly been heavily focused on user growth. However, there’s a lot of “noise” — as CEO Parag Agrawal reportedly warned staff about — that the company must contend with as it looks to do that.

This month, when Musk tried to back out of his bid to buy Twitter, the social media platform sued, claiming Musk’s effort to terminate the $44 billion deal was “invalid and wrongful.”

“We remain cautiously optimistic that Twitter can enforce the agreement though realize this could drag on for some time,” wrote Raymond James analyst Aaron Kessler on July 11, the day before the suit was filed.

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However, this all could come to a head more quickly than company watchers may have originally expected. On Tuesday, Delaware Chancery Court Chancellor Kathaleen McCormick ordered Twitter and Musk to find five trial days in October, which mostly aligned with Twitter’s request for an expedited trial.

Twitter’s immediate future is still dicey, with Colin Sebastian at Baird identifying “near-term trading volatility, macro factors, strong platform competitors, and changing consumer habits” as key risks for the company as recently as July 15.

Allie Garfinkle is a senior tech reporter at Yahoo Finance. Find her on twitter @agarfinks.

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